Company Tax

We are currently at a great disadvantage in respect to international trade due to the more competitive tax regimes of other developed (and developing) countries.

Month after month and year after year, despite the commodities boom, our trade figures are shocking. In fact, we have had continual trade deficits since the early 1970s. In 2007, Australia’s trade deficit was almost $19 billion. That is equivalent to the cost of running Australia’s entire defence force for that same year.

Balance of Trade

Company taxation on export income should be only 10% ...

In order to simulate industrial growth in export industries, we propose that company taxation on export income should be reduced to 10% down from the current 30% rate. If Australia constitutes 2% of the developed world and obtains an extra 1% of markets due to this tax incentive, then productive output should theoretically increase by up to 50%.

This should not only eliminate differential pricing by multi-national companies but should also increase the amount of global production that takes place in Australia. This will be enormously beneficial to Australia’s economy both now and into the future.

A company with 50% of its earnings derived from overseas under these initiatives would pay company tax at the rate of 10% on the overseas earnings and 30% on the local earnings - 20% instead of the current 30%.

Much political focus is placed upon each and every ¼% interest rate rise and considerable focus is placed on the fact that our inflation rate is slightly over 4% rather than slightly under 3%, whilst the political process tends to ignore something of much greater significance. Much of this discrepancy is accounted for by differential pricing, which is essentially arbitrage between related entities.

We believe that the trend demonstrated by the graph below would be reversed by the elimination of differential pricing, with the adoption of a more competitive 10% company tax rate for export income. 

Imports and exports